Few! It sure has been a while since you last heard from me huh?
Even though I’m quite a lazy person I do try and write to a schedule but to be honest, it just isn’t fun writing if you don’t feel like writing and unfortunately I haven’t felt like it much lately. Not that anything bad has happened, I’ve just been engaged in other exciting things like our fantastic trip to San Francisco and Las Vegas (not to mention Google I/O 2013). Luckily for you all though I’m back into the writing mood and showering you once again with Home Loan related awesome-ness.
Before we went away we finalised and were getting used to having our existing home loan with NAB as I alluded to in some prior pieces. As we’ve been with them now for a good two months I thought I’d give you all a full review of the entire process. Now I’d like to also point out here that I’m not some special hot shot that is able to get special deals or anything. Far from it, we don’t even have a particularly big loan (as you’d imagine what with paying it all off etc) so don’t think that you can’t do what I did. I simply walked in off the street and hey presto! A fantastic home loan that saved us money, all it takes is a little of your time and considering how much doing something like this will likely save you, you’ll once again be getting a far higher pay rate doing this than any other job you’ve done before.
Table of Contents
To start with I must admit I didn’t just “walk in off the street”. Technically I did, but this was only after some serious research as always. I’m constantly amazed at just how much money one can save simply by researching something even for 20 minutes on the train home. Apart from anything, research I find not only yields you a cheaper product, but also a better product too. So beforehand I searched through the Internet looking across all the banks and all their rates and deals. A good tool for this is the Rate City website which will list everything that’s available to you at your current loan amount and through both the major four banks as well as the smaller lenders. There are many other comparison websites out there and one home loan option I found continuously coming up through them was for UBank which is the online only version of NAB. Through further research though I found that they didn’t seem to be the best option as despite their quite low rates, their online only presence hindered their ability to setup a lot of loans with minimal fuss often resulting in people having to sit on the phone forever trying to explain what happened during the online application process.
To try and keep track of all the various banks, deals, specials and so on though Google Drive Spreadsheets once again came in handy. By listing all the various offers and also being able to enter in their “once off fee’s” or even ongoing fee’s I was able to easily calculate how much I’d save (or spend) by moving to that bank. It also made it very easy to compare two loans against each other as simply looking at their website normally doesn’t give you the FULL picture most of the time. Once I’d found the lowest of the low that also had the features I was after I started to prep for the ensuing negotiation.
As I’ve said time and time again, Negotiation is VERY important, especially when it comes to such a high priced loan. On a $300,000 loan the difference in getting 0.40% off your rate by negotiation equals $1,200 every year for the life of your loan. So it’s not just important to make sure that you’re getting a good rate, but that you’ve then further negotiated that rate down as much as possible. The best way to do this is to prepare for it before you walk into the bank.
Now previously I posted a Confessions Of An Australian Home Loan Specialist article addressing this specific point, what you can reasonably expect and how to best negotiate your way to an even better rate so I won’t dwell too much on this point. The main point is to read that post, understand how to prepare yourself and finances properly and do the prep work. You’ll also want to try and think up of a few questions/points they might try and see how you can rebut them. If you ask for a 0.50% discount off their offer and they flat out say “no”… what will you do/say? Do you have figures from other banks making that offer? Is there some other extra service you’re wanting to sign up to in order to justify that lower rate? Be prepared. This also helps you to be a desirable customer as it’ll be clear you’re ready to roll, they just have to say “yes” to your rate and they’ve got themselves a new customer on board with very little work.
When I walked in off the street the home loan consultant was of course, very nice and glad that I’d chosen NAB to move our home loan to. Giving her access to our current finances it was clear we were a good customer to have and that it’d be worth their time and effort. She tried very hard to push “extra” services whilst explaining the loan and discussing things with me but that is to be expected I guess. It actually turned out to be a bit of an advantage as I was able to use the fact that we were signing up to the “full package” as a valid reason for her to decrease the already low interest rate. Another thing that seemed to help was making it clear from the first point that I’d switch to them instantly so long as the maths worked out. If it was cheaper to be with NAB, no “convincing” was necessary. From that point onwards she knew all she had to do was make it a good deal and she’d have me as a customer 100%.
After we came to agree on all the main details I used the research and negotiation prep I’d done to repeatedly get the rate further down. The main line I used was “Well my brother recently told us he was with you and that they were getting X% so what can we do about matching that?“. Obviously this doesn’t have to be true or provable as they’re not exactly going to start interrogating you but do pick a reasonable and believable number. In my case, it was actually true though. Initially she wasn’t too forthcoming with wanting to match it however after I reminded her that it was all “just about the maths” for me she checked with her manager and finally approved the discounted rate. What rate was that? 0.06% off their advertised NAB Choice Package rates. So not only were we now getting a better rate due to me comparing all banks, we were getting a discounted “package” rate as well as our own personally negotiated discount rate. A great deal of savings.
The Fine Print
After the meeting and giving them all the information/documents they’d asked for NAB sent out the complete contract and finer detailed points for us to review and sign. They were long. They were boring. However they did come with one nice surprise which was that they’d actually mucked up our “negotiated discount” rate. Instead of it being 0.06% off their normal NAB Choice Package rate, it was 0.16%! Apparently due to the timing of the contract write up and printing as well as a recent change in interest rates they’d obviously printed the wrong figure. NAB rang through to me a few days later pointing out the mistake but said they were happy to honour the deal, even though it was a misprint. This move I thought was a very generous and honest thing and I’d like to give NAB a big extra point for it. Not too many companies happily admit that they’ve made a mistake and then still allow the extra discount to be put through so thank you again NAB.
Reading every piece of the contract and ensuring that both DW and I agreed to all the terms (and re-doing the maths one last time just to be sure) we signed them and I delivered them back to NAB so that they could go through with the official refinancing. NAB were also very quick to get these contracts to us, only taking 2-3 business days or so.
With the contracts all signed and delivered we now only just had to wait until NAB did the actual Settlement. They gave us a date for it and although it took 2 weeks for this to occur, there wasn’t anything we actually had to do aside from wait. They organised the meeting, did all the transfers, gave us all the documents afterwards and kept us in the loop before/after it happened. They could possibly have taken less time to do it all however I do acknowledge that these things involve many parties (including the Government) and that it is just a fact of life that they take a while. For all I know, that two weeks could have mostly been waiting for the other bank or even the Government to push papers around.
The End Product
After the settlement all our accounts were setup just as they’d promised and all the figures also checked out OK. Calling the NAB branch afterwards, they answered a few more specific questions I had about various things as well as confirmed that everything was as it should have been. Overall the refinance was very easy, with the only really annoying bit being that we had to read the long, boring contracts. They didn’t include anything bad but for such a large amount of money I wanted to be 100% sure.
Having had our loan with NAB now for a number of months now I can easily say that they’ve been nothing but a pleasure to deal with. They not only have upheld their promise to honour their mistaken rate discount, but communicated everything clearly and run a very tight ship regarding their branches, online websites, security and so on. So needless to say I’d highly recommend them, just make sure you negotiate that interest rate!
Does anyone else have their loan with NAB? How have they been for you? You getting any special rate?
The benefits include: 1) How to pay off your mortgage faster than 99% of people with one hour a month of work 2) How to get rid of your debt and have the freedom to spend money on the things you love, guilt free 3) Clear outline of how to setup your expenses, mortgage and general finance 4) How offset accounts work and how to get the same result without being gouged by the big banks 5) How to cut through the crap and focus on the things that truly matter when taking down a mortgage 6) How to adjust the strategy so it works for you, even if you have kids, even if you only have one income 7) How to do all of these things and maintain a normal social life (and never be cheap).